Promoter must pay ₹10 lakh for selling plot to third party after taking payment from buyer; Madras High Court upholds RERA compensation order

The Appellant (Promoter) entered into an agreement with the 1st Respondent on 18.10.2019 for the sale of a residential plot for Rs. 1,02,25,000/-.

Despite the 1st Respondent paying the consideration, the Appellant sold the plot to a third party, citing the cancellation of a General Power of Attorney by the original landowner.

The Adjudicating Officer, TNRERA, ordered compensation of Rs. 10,00,000/- and costs of Rs. 50,000/- in favor of the 1st Respondent on 03.06.2025.

This order was confirmed by the Tamil Nadu Real Estate Appellate Tribunal (TNREAT) on 11.03.2026.

1. Whether the Civil Miscellaneous Second Appeal is maintainable under Section 58 of the Real Estate (Regulation and Development) Act, 2016, in the absence of a substantial question of law.

2. Whether a contract between a landowner and a Promoter affects the statutory and contractual rights of a purchaser against the Promoter.

Section 58(1) of the Real Estate (Regulation and Development) Act, 2016, which stipulates that an appeal against an Appellate Tribunal’s order lies to the High Court only on grounds specified in Section 100 of the Code of Civil Procedure, 1908, necessitating the existence of a "substantial question of law".

The principle of privity of contract, establishing that a purchaser's rights are determined by their specific contract with the Promoter, independent of third-party agreements between the Promoter and the landowner.

The Court observed that the grounds raised by the Appellant were essentially factual in nature rather than legal.

It reasoned that under Section 58 of the Act, 2016, the High Court cannot interfere with concurrent factual findings unless a substantial question of law is presented.

The Court held that the internal contractual failures between the landowner and the Promoter (such as the cancellation of a Power of Attorney) do not absolve the Promoter of their obligations toward the purchaser under the sale agreement.

Since both TNRERA and TNREAT had already adjudicated the facts and documents, there was no scope for the High Court to re-examine factual findings.

The Court dismissed the Civil Miscellaneous Second Appeal and confirmed the orders of the lower forums granting compensation and costs to the 1st Respondent; all connected miscellaneous petitions were closed with no order as to costs.